Episode 132 – UAW Now Owns Chrysler, GM Bondholders Unhappy, Delphi’s Days Look Numbered

April 28th, 2009 at 12:00pm

Runtime 7:00

The UAW ends up with a majority stake in Chrysler. GM bondholders are unhappy with the company’s payment proposal. The automotive task force blocked GM from giving money to Delphi and taking over its steering business. All that and more, plus John chats with Jeff Gilbert of WWJ Newsradio 950 about what’s going on at GM.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. The UAW to take a majority control of Chrysler. GM bondholders accuse GM of bad faith. And Delphi’s days look numbered.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Tuesday, April 28, 2009. And now, the news.

Well, we woke up this morning to find out that the UAW is now the owner of Chrysler. You heard right, the union will end up with 55% of Chrysler’s stock, the AP reports. Fiat will end up with 35%. The remaining 10% goes to the government and secured lenders. The UAW is getting stock to pay for half the cash it’s owed for its retiree health care program. The union made more concessions including work rules, COLA, dental and vision care. Daimler also announced that it is giving up its 19.9% ownership in Chrysler, and forgiving all loans that Chrysler owes it. Hey, maybe Chrysler will avoid filing for bankruptcy.

But probably not GM. Autoline Daily was contacted yesterday via email by an ad hoc group representing GM’s bondholders. They are not happy. They say the UAW will get 50% cash for what it’s owed and will end up with 39% of GM’s stock, while bondholders will only get 10% stock and no cash. They say this amounts to using taxpayer money to play political favoritism of unions over bondholders. And it sure sounds like this will only get resolved in bankruptcy court.

And Delphi’s outlook looks grimmer. The automotive task force blocked GM from giving another $150 million to Delphi and taking over its steering business. According to the Detroit News, they have until May 9 to resolve Delphi’s bankruptcy. If that doesn’t happen, Delphi could be forced into liquidation.

With Pontiac’s days numbered, GM may need to rebadge at least one car line. Autoblog reports that the Pontiac Vibe, built in the NUMMI joint venture plant that GM has with Toyota, could become a Chevrolet. Along the same line Nissan may be changing its mind. The next-generation Titan was supposed to be built off the Dodge Ram, but with all the trouble Chrysler’s in right now that deal is on hold (subscription required). The company could update the current Titan.

Navistar became the first truck and bus maker to receive hybrid certification from the California Air Resources Board. Navistar’s International DuraStar hybrid box van and utility truck, and IC Bus CE Series received the certification. Under the program, buyers will receive $10,000 to $35,000 to purchase a vehicle, depending on the weight class. Navistar’s certification adds another $5,000 to this program.

Pedestrian safety seems to be all the rage these days. From making hybrid vehicles noisier, to the new crash standards, everyone seems to be pushing for better safety. Every driver’s worst nightmare is having someone dart out in front of them from between two parked cars. So BMW and some German Universities are developing a system called AMULETT, which is short for a really long German name. Basically it works by having people carry a small radio transponder that communicates with vehicles and can warn drivers when pedestrians are near. The device could be integrated into back packs, cell phones or even walking sticks.

Coming up next, I chat with Jeff Gilbert of WWJ Newsradio 950 about what’s going on at GM, we’ll be back right after this.

There’s been a lot of news coming out of GM the last few days – more cuts, layoffs and the dropping of Pontiac. Jeff Gilbert from WWJ Newsradio 950 joined me via Skype for a chat about what’s going on at the company and where things might be headed.

By the way, there’s more to this interview than what we had time to post here. You can watch the rest of our chat on the John’s Journal page of our website, AutolineDaily.com. We dig deeper into the recent GM news. Twitter was ablaze with people tweeting and asking about the company killing-off Pontiac. Jeff and I talk at length about that, so check it out.

Hey, join us again this Thursday night for another installment of Autoline After Hours. It kicks-off at 7 p.m. eastern time, or 2300 hours GMT for all you international viewers. Of course Pete and Jason are going to be there, but Robert Farago, publisher of The Truth About Cars.com will also be joining the fray via Skype. You’re not going to want to miss this one. We’ll also be focusing more on viewer comments so jump in the chat and let your voice be heard!

Anyway, that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

22 Comments to “Episode 132 – UAW Now Owns Chrysler, GM Bondholders Unhappy, Delphi’s Days Look Numbered”

  1. G.A.Branigan Says:

    Well,the UAW is majority owner in Chrysler.Now we’ll see what,if anything they can do to turn the company around.The spotlight is on you.GM axing pontiac is good,they still need to 86 gmc.GM is the master of the dept.of redundency dept.Rebadgeing just pisses people off,confuses them,and they go and buy a Ford.

  2. Andy Says:

    I thought GM was going to slim down to just Chevy and Cadillac?

    Personally, I feel that Buick should go before Pontiac.

  3. G.A.Branigan Says:

    I believe that GM will end up cutting buick as well as gmc.If they concentrate their efforts on improving the chevy line,including the trucks,they will do okay.There is no reason not to greatly improve their quality of materials,fit and finish and updated powertrains.Later in time,they could possibly revive a brand.

  4. pedro Fernandez Says:

    Next to go will be Saturn, I think they’ll keep Buick because it does well in China and it will be placed between Chevy and Caddy. GMC is just rebadged Chevy trucks so it should go. Make the Vibe the Chevy Nova or Chevelle and the G8: Impala SS RWD, the way it should be.

  5. Kit Gerhart Says:

    I just read that a survey of GMC Sierra owners indicates that for many, their second choice would have been F150 rather than the nearly identical Silverado. Go figure. I guess the “professional grade” ads worked in brainwashing a certain group of people.

    Regarding the G8, I would have liked to see it survive as a Chevy, but I’ve read that it will go away with the Pontiac brand. Vibe probably will become a Chevy, as the NUMMI arrangement with Toyota is still in place. A car like Vibe/Matrix is needed in Chevy showrooms. They need a smallish carlike wagon in addition to the retro-styled HHR which, while a decent car, is not everyone’s cup of tea.

  6. Dan D Says:

    Apparently GM doesn’t think much of its Buick-GMC-(formerly) Pontiac dealers. They will lose volume to Chevy dealers (and other brands) when the G6 and G5 go away, and to add insult to injury, the Vibe may be rebadged as a Chevy and soldier on? There go some more loyal (and largely younger) customers, plus GM now has to spend money to train the techs at all of its Chevy dealers. If the Vibe is not really what Buick is about, they could have easily revamped the grille, minus the split in the middle, and called it a GMC instead. Over at Chevy it will be lost in competition for salesperson’s attention amongst the Aveo, HHR and forthcoming Orlando. Didn’t they learn anything from the Prizm experience? Oh yeah, the moved the NUMMI car to Pontiac…

    It is no wonder GM is where it is today!

    Dan D
    Chester, CT

  7. pedro Fernandez Says:

    Completely agree with Dan, they keep screwing up, they totally messed up the whole Prizm thing by pricing it higher than the Corolla, which is why I ended up buying a Corolla instead of the Prizm. Then at the end of the model year they had to have a big rebate on all the unsold Prizms. They should have continued that model instead of the inferior Cobalt, would have sold a lot more cars than the Vibe ever would.

  8. Tony Gray Says:

    I have purchased 29 vehicles over my lifetime, the vast majority of them from General Motors. I will not, repeat NOT, but a car from them if the government winds up owning and controlling them.

    Getting government help via loans or guarantees is one thing, but ownership, even if it cuts the payback in half, is just too close to socialism for me and creates an unfair and uncompetitive marketplace.

    If this occurs, my next vehicle will come from Dearborn.

  9. Tony Gray Says:

    Sorry, fat fingers. I meant to type I will not BUY a car from them.

  10. Salvador G. Says:

    oh Boy! Oh bOy!
    I wish this month was over already. I guess this is it, IS EVERYONE HAPPY NOW??
    The union gets Chrysler and GM with the goverment, bond holders get the finger (which they deserve) FIAT does not get everything (until they buy the rest) GM will go under and Pontiac gets the axe.
    Oh YEAH! and we have a Pandemic now,
    SO is everyone HAPPY now??

  11. Alex Kovnat Says:

    I believed for a long time that GM should slim down to just 3 sedan and 1 truck line: Cadillac, Buick, Chevrolet and GMC. Oldsmobile died because their line was too parallel with Buick, and now Pontiac has been axed because their line tends to duplicate Chevrolet’s function. GMC could then serve as GM’s truck/pickup truck/van marketing outlet.

  12. Kit Gerhart Says:

    Dan D.

    The Vibe is way more what Chevy is about than any other GM division, except maybe Saturn which is going away. It is an efficiently packaged, practical hatchback/wagon which is about function, not pretense. That’s what Chevy needs. There is no way Vibe would make sense with a GMC badge. GMC is about the truck crowd which, for whatever reason, doesn’t consider Chevy to be “trucky” enough. Vibe is very much a car, not a truck.

    At Chevy, the Vibe, or whatever they will call it, will not be lost among the Aveo and HHR to most people. The HHR is a retro styled tall wagon that goes out of its way to say “American.” The Aveo is a worst-in-class subcompact that sells mainly to people who go to a Chevy dealer and buy on basis of price, and nothing else. Vibe, on the other hand, is a small wagon that will sell on what it is, a functional, reasonably efficient, and reliable transportation appliance.

  13. Tom Martin Says:

    It’s sure is a mess, but I am still optimistic that Ford and GM will emerge as stronger companies. You can already see it in the products.

    Chrysler will also be a better company, if is survives.

  14. pedro Fernandez Says:

    it is incredible that it has taken near death for these companies to get their act together, after all the years watching the competition catching up and passing them, while they stuck to the old ineffective ways, I do hope that they can pull through and become viable companies and that they learn from this and don’t become complacent again and keep up with technology and trends.

  15. Dan D Says:

    Kit Gerhart -
    I’m not sure I agree with you about what GMC stands for, apart from being a slightly dolled up Chevy truck. I think it depends on who you ask (I once had a Jimmy, only because I preferred the grille over the Chevy design, nothing more). I admit badging the Vibe as a GMC is a bit of a stretch, but it certainly isn’t a Buick. My point was more about the dealers. The Buick-GMC dealers are going to be light on product variety and Chevy dealers arguably will have more than enough without taking product away from them. If the Pontiac customers all leave the fold, how long do you think the Buick-GMC franchise is going to last? Keeping the Vibe would at least provide a stopgap. Maybe the next NUMMI product sourced for GMC could then be a smallish pickup truck to replace the Canyon, since that family of trucks seems to be heading for a dead end. Long term product portfolio planning is something alien to GM, but they had better start getting the hang of it.

    Moreover, I speak from personal experience that Chevy did a lousy job selling the Prizm back in the day. I bought one from an Atlanta area store and they were treated like black sheep on the lot compared to the other models. When I said I wanted one I was handed off to “the new kid”, who was assigned to get rid of the few they had on hand. They clearly didn’t appreciate what a fine car it was (still have in in the family too.)

  16. Todd Jaspers Says:

    It’s like a hug blur… I can’t believe what I’ve been seeing the past 2 weeks… never thought I’d ever see this day.

  17. John Says:


    what about the new individual tracking device?

    “AMULETT, which is short for a really long German name. Basically it works by having people carry a small radio transponder that communicates with vehicles and” BIG BROTHER….!

  18. Rob Says:

    You people haven’t been listening to John. He’s pointed out more than once that GMC and Buick won’t be going away for one reason…THEY MAKE MONEY.

    It would be stupid to kill brands that bring in a profit, so they won’t kill them.

  19. Kit Gerhart Says:


    My main thought about GMC vs. Chevy is that the IMAGE of GMC, for whatever reason, is more “trucky” than for Chevy. The main difference between Chevy and GMC trucks is the front end styling, and the split grill Chevy has used lately may be less trucky looking than the GMC grills.

    To me, it would make sense to combine Cadillac and Buick dealers, and include GMC as long as it survives. With any luck, that should provide enough product mix for dealers to make a go of it.

    In my home town in Indiana, there is a Chevy dealer, a Pontiac/GMC dealer, and a Buick/Cadillac/Jeep dealer. The latter also has Chrysler/Dodge next door. I suspect the existing Pontiac/GMC store will not be around too much longer, and the Buick/Cadillac/Chrysler people will get GMC. Either that, or no one will be selling GMC.

    They definitely need something to replace Canyon/Colorado. Those vehicles are a rare case where the new ones, to a lot of people, are not as good as the ones they replaced (S10/Sonoma). Canyon/Colorado were near worst-in-class, even when new. One wonders how that happened.

  20. Roger Tocchetto Says:

    Wow, can’t believe the Chrysler and GM headlines. I’m really pessimistic about Chrysler, imagine the leverage managers will have to cut labor related costs after this one.
    With the GM cutting Pontiac, what a sad story that is. I wish they kept the G8 as a Buick sport – who cares about the Vibe anyways???. Also, I’m sure the GMC/Buick dealers will be now screaming for low end vehicles, there will be a big hole in their lineup.

  21. pedro Fernandez Says:

    I have a better solution to prevent pedestrians from getting struck by cars: BE ALERT. LOOK BOTH WAYS BEFORE YOU CROSS DUMMY, IF YOU GET HIT BY A CAR, YOU LOSE! Got news for you, by using your credit/debit card instead of cash, you can be traced wherever you go, where you stay, where and what you eat, ect, ect. I just took a short trip where I used my debit card just about everywhere, and by doing this I left a trail of all the places I went. How much I spent ect. This could be used by big brother to check on each and everyone of us.

  22. Tom L Says:

    No one knows how GM will get the dealer count down to the new promised level. I expect one way is to put Chevy/Buick under one roof with Cadilac as a stand alone. GMC can simply fade away slowly as the dealers combine. Put both badges on the trucks if you want. It isn’t “General Motors Coach” like the old bus company, it’s “General Motors Corp.” That’s a valid badge somewhere on a Chevy.

    Cadilac has the Escalade and does not need GMC.

    There is no room for anything like today’s Pontiac/Buick/GMC dealer if they are to really hit the low dealer number.